As the upward trend in home sale prices continues in the nationwide housing market in the second half of this year, a forecast said jeonse prices will post a rise twice as high as sales prices. The aftereffect of the steep drop in housing starts in 2023 is leading to a decline in move-in volume, deepening a shortage of jeonse supply, and this could in turn stir the sales market, analysts said.
The Construction & Economy Research Institute of Korea (CERIK) on the 18th held the "2026 second-half construction and real estate outlook seminar" at the Construction Hall in Gangnam District, Seoul, and forecast that nationwide dwelling sale prices will rise 2.5% this year and jeonse prices will rise 5.0%. It projected sale prices in the Seoul metropolitan area will climb 4.5%, while non-capital regions will see only a 0.5% increase.
Research fellow Kim Seong-hwan of CERIK said, "In 2026, the housing market is expected to see stronger upward pressure in the Seoul metropolitan area, while the divide between prime locations and less-preferred areas will widen in non-capital regions," adding, "Depending on the policy mix—loan oversight, expanded supply, and eased regulations on redevelopment and reconstruction—the pace of transaction volume and price gains could vary."
CERIK picked the jeonse market as the key variable for the second-half housing market. The supply contraction from reduced housing starts in 2023 is taking full effect, and as move-in volume continues to decline after 2026, pressure from a jeonse supply shortage is mounting. In addition, with the burden of sale prices and loan regulations, end users are expected to stay in the rental market instead of buying, pushing up jeonse demand.
Rising jeonse prices are highly likely to act as a prop for sale prices. A shortage of jeonse listings and a heavier deposit burden could lead to higher monthly rents, and if the jeonse-to-sale price ratio rises, some demand could shift to the sales market.
The rise in home prices in the Seoul metropolitan area was analyzed as the combined result of fewer new move-ins, higher jeonse prices, a preference for new builds and prime locations, and improved purchasing power from gains in financial assets. However, with much of the first-half increase already priced in and loan regulations, interest rates, and policy uncertainty still in play, the second-half rise in the metropolitan area is forecast to be limited to around 2.5%.
The non-capital housing market is expected to escape years of declines, posting a nominal increase of about 0.5%. However, CERIK said this is not easy to view as a recovery across regional markets. It said the result reflects a wider price gap with the metropolitan area, reduced price burdens after cumulative declines, and selective gains in areas with strong industrial conditions.
Despite a recovery in orders, the improvement in the construction economy on the ground is expected to be limited. CERIK projected domestic construction orders this year will rise 8.9% from a year earlier to 240.8 trillion won. It said orders will increase on the back of expanded public procurement and more civil engineering projects, but construction investment will reach 266.1 trillion won, up just 0.3% from a year earlier.
The problem is that orders are not smoothly translating into actual groundbreakings and investment. Over the past five years, the cumulative gap in area between permits and starts reached 190.9 million square meters. That is 1.8 times the average annual area of starts. Soaring construction costs, tighter screening for project financing (PF), and a buildup of unsold homes in non-capital regions were cited as major reasons blocking new starts.
Research fellow Lee Ji-hye of CERIK said, "In 2026, the construction economy will be partially offset by the public sector and civil engineering, but the on-the-ground recovery centered on private nonresidential projects, non-capital regions, and small and midsize firms will remain limited," adding, "We need to strengthen public execution capacity, provide financial support for sound PF projects, and expand investment for balanced regional development."
CERIK President Lee Chung-jae said, "The construction and real estate market is a key pillar that determines the vitality of the national economy and the stability of people's housing," adding, "With positive factors like stabilizing interest rates coexisting with constraints such as regional market slumps and PF restructuring, we should view the market not as a simple business cycle but from the perspective of structural change." He added, "The government and the market should normalize the supply system based on mutual trust and push for innovation across the entire construction industry ecosystem."